Thoughts in Between

by Matt Clifford

Matt's Thoughts In Between - Issue #58

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The national security consequences of... Grindr?

I've talked before about the growing geopolitical dimension of technology ownership. This week threw up an interesting example: according to Reuters, the US's Committee on Foreign Investment in the United States (CFIUS), which reviews the national security implications of foreign investments, has pushed Beijing Kunlun Tech (a Chinese tech company) to sell its stake in Grindr, a popular gay dating app.

The concern seems to be ownership and usage of US citizens' private data. This is a relatively new angle for CFIUS; most of its previous interventions have been about IP or infrastructure ownership. Interestingly, though, it's a position that is core to China's national security tech strategy. I attended a closed conference last year at which a former UK government minister said something along the lines of:

The US's position is that there should be no technological advance in which it does not have a strategic advantage. China's position is that no non-Chinese company may own significant data on Chinese people

I suspect we'll see ever more mutual suspicion along these lines (see, e.g., the latest developments in the Huawei saga - though also note that Huawei's profits are up!): a "technology paranoia" arms race.

Saudi Arabia vs Jeff Bezos

If China is the most interesting country in the new geopolitics of technology, Saudi Arabia is a close second (see previous coverage). This week the attempted blackmail of Jeff Bezos, arguably most bizarre tech story of 2019, took on a national security angle. Bezos's security chief, Gavin de Becker, issued a report that Saudi Arabia had obtained Bezos's personal data as part of the same attack. Do read the whole thing.

De Becker makes two extraordinary claims. First, that Saudi Arabia and AMI (the Enquirer's parent company) collaborated on anti-Bezos activity. According to de Becker, the Saudi interest in doing so relates to Bezos's ownership of the Washington Post, where murdered journalist Jamal Khashoggi worked. The extent of the Kingdom's online activity (including an agent within Twitter!) against its perceived enemies makes for stunning reading. Second, de Becker claims that the "Enquirer became an enforcement arm of the Trump presidential campaign, and presidency". He cites this "non-prosecution agreement" between AMI and the Southern District of New York, arguably the most important law enforcement agency in America right now.

A conspiracy that touches on the world's richest man, the Middle East's biggest oil state and the President of the United States sounds like a paperback thriller plot. But it's real life and, presumably, only just starting to unravel.

It's IPO season - who are the real winners?

Silicon Valley is ablaze with IPO fever. Between Zoom's amazing numbers, Lyft's strong performance, and Airbnb, Uber, Pinterest and others ready in the wings, VC-land is excited about a season of liquidity events. There will be interesting second order implications once the lock-up periods end, such as 4,600 new millionaires hitting the already sky-high San Francisco housing market.

What does a "good" IPO look like? The media usually reports a "pop" - a big increase in share price on the first day - as a good thing, but arguably this just means the company left money on the table (it gets paid the opening price for the shares it issues). Steve Waldman has a superb post on this topic from 2011, following LinkedIn's IPO. He argues there are actually two kinds of IPOs: pricing events, where you want a big pop to maximise the value of the shares you still own, and financing events, where you don't, as it just means unnecessary dilution.

This raises a lot of questions about the incentives of the investment banks that arrange IPOs. I recommend everyone reads this classic Felix Salmon post on Goldman Sachs' handling of eToys' 1999 IPO. The best line:

If you claim you do know where the fees are, banks want you as a customer. You don’t know. Really, you don’t.

VCs love IPOs, but the bank always wins.

Quick Links

  1. Celibate Nation? Charts that show that Americans are having way less sex than their parents did...
  2. Heathen Nation? At the same time, Americans are also way less religious than their parents were.
  3. Superintelligence, the Movie. Apparently the existential risk posed by AI is going to get Hollywood treatment.
  4. Foreign policy in pictures. What image best sums up US Foreign Relations?
  5. Wipe away those tears. Incredible video of natural symbiosis at its finest.

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Until next week,